Poland: Economy, Doing business, Foreign Direct Investment (FDI)

Course contents

About Poland
Economic Outlook.
The tax system
Foreign Direct Investment (FDI) in Poland. Why to Invest in Poland?
Setting up Business in Poland
Case study: AGORA SA

Learning Unit Summary

Poland is the 9th largest country in Europe and 69th in the world. Poland is one of the success stories of the new Europe, transforming itself from communist-bloc one-party state to parliamentary democracy and European Union member in a remarkably short period of time.

Poland is situated in the middle of the continent, has borders with 7 countries: 4 EU members (Lithuania, Slovakia, Czech Republic and Germany) and 3 non-EU members (Russia, Belarus, Ukraine). Poland, with 38.5 million inhabitants, has the eighth-largest population in Europe and the sixth-largest in the European Union. Poland is predominantly Catholic.

The rapid pace of economic expansion has continued, fuelled by robust investment and private consumption. The labor market has tightened further, leading to double-digit wage increases. This, combined with soaring fuel and food prices, hikes in regulated tariffs and general excess-demand pressures, has pushed the inflation rate well above the central bank’s target. With enormous real income gains, the economy should continue to expand above potential rates for some time, resulting in a widening current account deficit. The Polish economy has weathered unscathed the global slowdown so far but it is unlikely that it will not feel the adverse effects of diminished growth in Europe. Export growth at that rate seems unsustainable into the near future amid global slowdown and the zloty appreciation.

The Port of Gdansk is the fourth-largest metropolitan area in Poland and the country’s major seaport. It is on the southern shores of the Gdansk Bay off the Baltic Sea.

The Polish tax system distinguishes direct taxes (e.g. personal income tax, corporate income tax, tax on civil law transactions, real estate tax, or tax on means of transport) and indirect taxes (e.g. value added tax, excise tax). Poland is a party to many international treaties on avoidance of double taxation.

Foreign Direct Investment (FDI) in Poland
Poland attracted a record amount of foreign investment in 2000, with net FDI estimated at USD 9.3 billion, of which USD 4 billion was accounted by income from sales of Telekomunikacja Polska. At the end of 2002, the accumulated value of foreign investments was over USD 65 billion, putting Poland in the first place among the FDI attracting countries in Central Europe. However, in terms of FDI per capita Poland ranked only fifth, after Hungary, Estonia, the Czech Republic and Slovenia.

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